9th Sep 2015 13:23
LONDON (Alliance News) - Wm Morrison Supermarkets PLC Wednesday revealed that it is selling 140 M local convenience stores for GBP25 million in cash, taking a loss on the sale, to a team led by retail entrepreneur Mike Greene.
The grocer said it will retain five M local stores which are either on forecourts or will be converted to small Morrisons supermarkets.
The stores are being sold to an investor group led by Mike Greene, a former executive at convenience store chain Spar, and backed by private equity company Greybull Capital.
In March, Morrisons announced that it was undergoing a review of the convenience store business, and later concluded that M local would have required significant further investment in new sites, plus additional capital expenditure and lease commitments in order to reach profitability.
In the financial year 2015, the M local stores which are being sold recorded an operating loss of GBP36 million.
The supermarket said that the sale represents the best solution for Morrisons and will enable future investment to be focused on core supermarkets.
Morrisons added that it expects to incur a loss on disposal of around GBP30 million and said that it retains a guarantee on individual lease obligations which could revert to Morrisons if the new business does not succeed. The residual contingent liability in this event is estimated at up to GBP20 million.
"Convenience is a large and growing channel in UK food retailing. Morrisons learnt much from its entry into the market, but M local was unable to scale. However, we remain open to other opportunities in convenience in the future. I would like to thank all the Morrisons colleagues for their hard work and dedication to M local," Chief Executive David Potts said.
Shares in Morrisons were trading up 3.7% at 176.30 pence following the announcement, one of the best performers in the FTSE 100.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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